When leasing commercial real estate, there is much to consider when comparing on space against another. This checklist, used in conjunction with our commercial real estate tips, can help ensure that you are making the best overall decision for the future success of your business.
Rent: This is the rent required to be paid in the first year of the lease. How does it compare to the market and other similar properties? Also look at rent increases over the term of the lease. Rent reviews are done in different ways and you need to know how they may impact you and the rent you will pay beyond the first year.
Incentives available: Incentives can be included in the lease. Does the lease include any? Is it in the form of a rent reduction, rent free period, or leasehold improvements? There are advantages and disadvantages to be assessed in each case.
Terms of lease: What is the length of the lease? How flexible is the landlord in giving the tenant a longer occupancy if required?
Lease deposit: This is the amount of deposit required by the landlord for the premises. The amount of money is usually one month’s rent paid in advance. Is a standard lease deposit required?
Rental guarantee: This is the type of guarantee required by the landlord as part of lease acceptance. It is common for guarantees to be cash, directors’ or personal guarantees, or bank guarantees. The amount and type sought by the landlord will vary.
Services: Each new property will have unique services such as telephone, internet, water, power, cleaning, air conditioning, security, and transport access. Know what’s important to you and evaluate each property’s services independently.
Amenities: Each property has certain design features that are classified as amenities for use by the tenants. This can be car parking, signage, storage, common areas, landscaping, toilets, showers, conference rooms, etc. Are the amenities offered important to you? Or will you be paying for amenities that are not of value to your business?
Landlord funded improvements: Commercial landlords will generally provide certain types of improvements as part of the leasing process for a new tenant. This can include new carpets, other floor coverings, painted walls, suspended ceilings, air conditioning configuration, lighting configuration, or similar improvements. How generous is the improvement allowance and how does it compare to other properties?
Transport corridors: Some businesses need to be near transport corridors or access points such as public transportation, railheads, ports, or airports. Is this the case for you?
Proximity to and types of business neighbors: Some tenants need to be in close proximity to other businesses of a similar type. If this is something of benefit to your business, your assessment of neighboring businesses is essential.
Space usability: Each property has design and layout limitations. How convenient is the available space for your needs? Will it structurally work “as is” or will it need significant modifications?
Floor loading factors: In multi-story occupancy, the floor loading factor needs to be considered when high weight loading could occur. This could be for the reasons of storage, file records, libraries or the like. Keep your own needs in mind.
Common areas: Every building will have common areas particularly when there are multiple tenants to consider. The common area typically includes the entrance way to the main part of the building as well as the relative floors adjacent to the lifts or stairs. Are these common areas functional and convenient?
Interior columns: The older the building, the more you will find interior columns located within the tenancy space. These columns can be a hindrance in designing a new floor plan. Consider whether this is a concern for you.
Floor to ceiling elevations: Modern buildings give ample floor to ceiling elevations which can accommodate partitions and fit out structures for privacy and functionality of the business. A distance of 2.6 meters is considered a standard satisfactory elevation for traditional office space. Any extra space gives a sense of spaciousness and can be a benefit for some businesses.
Air conditioning: Does your business require air conditioning? If you are anticipate interior modifications, air conditioning modifications will likely be required as well. Engineers and architects would normally be involved in the review process.
After hours air conditioning: Do you require air conditioning beyond regular business hours? Some buildings may not be able to accommodate this need. The landlord and architects for each building should give you an assessment of this capability.
Elevators: In multi-story buildings, elevators are fundamental to the tenant’s business. The quality and speed of elevators in providing this service needs to be assessed.
Security: Every commercial space will have different levels of security. Security, or lack of it, can affect the business, the access of its customers, the access of its staff, and the security of its confidential documentation and procedures.
Floor and wall ducts: This considers the conduit capabilities for running communication, power, and other essential cabling through and around the workspace. It is important that there is flexibility should the new tenant have specific layout or equipment needs. If the tenant has high numbers of telephones or computers, then duct locations will be of concern.
Energy factors: How energy efficient is the space? You need to identify whether each building complies with energy initiatives and meets your personal energy conservation goals. Energy efficiency also impacts utility bills so this also needs to be considered.
Workplace health and safety: Each commercial space will have workplace will have design implications that affect health and safety. At the time of construction each building must comply with health and safety codes established by the local building authority. Required systems may include fire sprinklers, hydrants, fire stairs, air-conditioning fire safety designs. Is the structure up to code?
Floor coverings, wall treatments, and window treatments: All of these have both cosmetic and functional considerations for the new tenant. The quality of these should be a commercial grade. Are these adequate for your needs? If replacements are deemed necessary, will the landlord be paying for it or will you?
Storage: Typically these areas can be storage rooms or service areas that are not frequented by tenants or members of the public. These areas need to be secured and additional costs are likely to apply.
Signage: Some properties require specific sizes and styles of signage. This may be signs on the exterior of the building and/or directory board signage within the building. Knowing what costs may be incurred, or whether the landlord is assuming this expense, is essential.
Car parking: The availability of on-site parking may be important for both staff and /or customers. The availability of car parking and the number of parking spots available may influence future occupancy decisions.
Expansion space: If future expansion is anticipated, will the property accommodate the future space requirements?
Maintenance: Is the building well maintained? Experienced landlords will spend money on cosmetic maintenance regularly so that the building conveys a first class appearance at all times.